A rotten idea was born 82 years ago today called the Agricultural Adjustment Act. Like many New Deal policies, the Act worsened the Great Depression and struck a blow to liberty.
FDR, intent on keeping the political support of major agricultural interests, decided to increase farming income by creating scarcity, which would drive up prices. Thus, in an age of hunger, the government paid farmers to cease production and destroy crops and livestock. Since a supposed surplus already existed, however, the government also paid farmers to destroy what they had already produced. Cotton farmers, for example, received $100 million to plow under 10 million acres of crops. The government also awarded the slaughter of six million baby pigs. Only a measly tenth of that number went to hungry mouths. An ironic side note: while the government encouraged the burning of oats, the destruction of wheat and corn crops, and the slaughter of livestock, the United States continued to import these commodities.
This outrageous policy inflated food prices during the Great Depression. It also caused massive unemployment among poor sharecroppers and farm wage workers. But FDR did achieve one of his key objectives: he lined the pockets of the big-wig farmers and landholders with political power.
The Agricultural Adjustment Act is a great case study in cronyism gone wild. In the midst of depression, the government wielded its power to help out powerful political allies, wealthy landowners and big agricultural interests, at the expense of consumers and poor workers. This same tired theme plays out today in many forms, such as big corporate bailouts, the export import bank, or laws that restrict competition. PLF has fought against many examples of government cronyism by challenging unfair licensing laws.
Sadly, the federal government still dabbles in the failed policies of the Agricultural Adjustment Act. The Department of Agriculture still issues marketing orders that restrict production and enforces orders requiring that good food rot upon the ground. The endurance of ineffective government despite a terrible track record proves that the authors of the Constitution had it right–without meaningful restraints on power, its misuse is inevitable.